Department of Energy's Question of the Month

02.28.17

What are state and local governments doing to incentivize alternative fuels and alternative fuel vehicles (AFVs)?

Answer:There are many notable incentive activities at the state and local levels. Many states offer incentives for alternative fuels that advance specific environmental and energy security goals, while cities provide even more localized support.

States are targeting vehicles, infrastructure, and other means to encourage AFV adoption. Below are various types of incentives, as well as hyperlinked examples of each:

AFV Purchase Incentives: States offer grants, rebates, and tax credits for the purchase of AFVs. While some states may focus vehicle incentives on a particular fuel type, such as electric vehicles, others are more general in their support. States provide AFV purchase incentives to consumers, commercial fleets, and public fleets, such as schools and government agencies. Different incentive mechanisms tend to be more appropriate for different categories of vehicle purchasers; for example, grants are often limited to certain types of entities. Public fleets may not be liable for taxes, so they usually benefit more from grants than from tax credits. Private fleets can benefit from grants, rebates, and tax credits.

Fueling Infrastructure Purchase and Installation Incentives: Similar to AFV incentives, states provide grants, rebates, and tax credits for alternative fueling infrastructure. States usually create incentives for the physical fueling infrastructure, but many programs also support installation costs. Some states also offer a tax credit or tax reduction for the production or purchase of alternative fuel itself. Fueling infrastructure incentives may stipulate that the fueling or charging station must be available to the public, which helps to increase the availability of alternative fuels to a broader range of entities.

Municipalities are also playing a role in supporting AFV deployment. Cities and counties incentivize AFVs in a number of ways, including by offering free or discounted parking, expediting permitting processes, and providing vehicle and infrastructure grants. For example, New Haven, CT, provides free parking on city streets for AFVs, while Los Angeles, CA, offers instant, online residential electric vehicle supply equipment permitting approval. The Alternative Fuels Data Center’s (AFDC) Local Laws and Incentives page provides more information on these and a greater array of other local options; while the page regarding local laws and incentives is not meant to be comprehensive, it provides users an idea of the different municipal programs and policies that exist (http://www.afdc.energy.gov/laws/local_examples). If you are aware of an innovative way that municipalities are supporting alternative fuels and vehicle acquisition, please contact the Clean Cities Technical Response Service at technicalresponse [at] icf [dot] com to share the details.